Worldcall Telecom Limited: A Performance Overview (2019-2024)

Worldcall Telecom Limited (WTL), a public company established in Pakistan in 2001, commenced operations in 2004. The firm delivers Wireless Local Loop (WLL) and Long Distance and International (LDI) services throughout Pakistan. Furthermore, it re-broadcasts international and national satellite, terrestrial wireless, and cable television and radio signals, facilitates interactive communication, and develops, maintains, and operates licensed telephony services, all under authorizations from the PTA and PEMRA.

Shareholding Structure

As of December 31, 2024, WTL’s capital is divided into 4.982 billion shares held by 27,841 shareholders. The general public in Pakistan holds the majority stake at 63.83%, followed by associated companies, undertakings, and related parties, which collectively own 19.6% of the shares. Joint stock companies possess 9.33% of WTL’s shares, while foreign public investors hold 6.92%. The remaining portion is distributed among various other shareholder categories.

Financial Performance Analysis (2019-2024)

WTL’s revenue, which had been declining until 2021, experienced subsequent growth. However, the company’s net income remained negative after 2019. Profit margins hit their lowest point in 2021. Conditions improved marginally in 2022, marked by a positive EBITDA margin and a reduced net loss. Unfortunately, the net income and margins deteriorated again in 2023. In 2024, the company reported a positive EBITDA margin, and its net loss decreased significantly (refer to the profitability ratios graph). A detailed review of performance during this period is presented below.

2019 Performance

In 2019, WTL’s revenue decreased by 12%, reaching Rs. 3,857.07 million due to reduced revenue across telecom, broadband, and other segments. Lower interconnect, settlement, and other charges led to a 22.86% year-on-year decrease in direct costs. Operating costs also fell by 18.57% due to workforce reduction, which lowered salary expenses.

While direct and operating costs offered some relief, other expenses increased significantly as the company made provisions for expected credit losses on long-term receivables. Provisions for expected credit losses on trade debt nearly doubled, driving other expenses up by 102.44%. Other income was unfavorable, declining by 27.35% year-on-year.

Consequently, EBITDA dropped by 19.52%, and the EBITDA margin declined from 43.82% in 2018 to 40.11% in 2019. High depreciation and amortization charges, along with finance costs, resulted in a pre-tax loss of Rs. 201.58 million in 2019, compared to a pre-tax profit of Rs. 562.28 million in 2018. However, tax adjustments led to a net income of Rs. 65.49 million, an 85% decrease from the previous year. The net profit margin decreased from 10% to 1.7%, and EPS stood at Rs. 0.02, compared to Rs. 0.09 in 2018.

2020 Performance

In 2020, revenue further declined by 18.59% to Rs. 3,140.13 million, driven by a significant drop in revenue from broadband services, followed by telecom services. Direct and operating costs also decreased. Other expenses decreased due to lower provisions, while other income declined due to the impact of IFRS-9 and fewer write-offs. Despite cost-saving measures, EBITDA decreased by 22.71%, with an EBITDA margin of 38%. Depreciation and amortization charges decreased by 23.97%.

However, finance costs increased by 8.54% year-on-year despite rate cuts due to COVID-19. This increase was due to restructurings with financial institutions and fewer liabilities written back. The company reported a net loss of Rs. 150.27 million, with a loss per share of Rs. 0.06.

2021 Performance

In 2021, WTL’s revenue further declined by 32.67% to Rs. 2,114.22 million, leading to decreases in direct and operating costs. Other expenses increased by 26.45% due to impairment of long-term investments, losses on disposal of inventory, and higher provisioning for expected credit losses on trade debts. Other income declined by 52.96% due to fewer write-offs.

EBITDA, which had been positive in previous years, turned into a loss of Rs. 90.15 million. Depreciation and amortization increased by 12.84%. Finance costs decreased by 43.45% due to monetary easing. The net loss increased by 902.41% to Rs. 1,506.36 million, with a loss per share of Rs. 0.51.

2022 Performance

In 2022, revenue showed signs of recovery, increasing by 8.85% to Rs. 2,301.25 million, driven by robust Long Distance & International (LDI) revenue, with added support from the broadband segment. Direct costs increased by 6.34%, while operating costs slightly decreased as the company did not book provisions for advances to suppliers.

Other expenses supported EBITDA as losses on disposal of inventory and impairment losses on long-term investments from the previous year were absent. However, other income was unfavorable due to fewer reversals of provisions and fewer write-offs. EBITDA entered positive territory, reaching Rs. 104.65 million with an EBITDA margin of 4.55%.

While depreciation and amortization remained stable, finance costs increased by 24.915%, resulting in a net loss of Rs. 1,384.98 million, 8% less than the previous year. The loss per share decreased by 37.25% to Rs. 0.32.

2023 Performance

In 2023, WTL’s revenue increased by 27.91% to Rs. 2,943.55 million, primarily due to a rise in Long Distance & International Earnings driven by increased dependence on digital communication and remote working. However, direct costs increased by 51.58% due to increased interconnect, settlement, and other charges. Operating costs increased by 18.59% due to higher payroll expenses and travel charges.

Despite reducing the workforce from 354 employees in 2022 to 317 in 2023, payroll expenses remained high. Other expenses surged by 78.93% due to significant exchange losses from Pak Rupee depreciation. Other income decreased by 3% due to lower gains on adjustments related to IFRS 9, fewer liabilities written back, and no gains recorded on lease terminations.

WTL recorded an LBITDA of Rs. 422.64 million, compared to an EBITDA of Rs. 104.65 million in 2022. Depreciation and amortization decreased by 11.17%. However, finance costs increased by 59.87% due to high discount rates and increased borrowings, pushing the gearing ratio from 70.26% in 2022 to 111.47% in 2023. The company reported a net loss of Rs. 2,008.44 million, with a loss per share of Rs. 0.46.

2024 Performance

In 2024, WTL’s revenue experienced significant year-on-year growth, reaching Rs. 5,046.44 million due to increased Long Distance & International (LDI) earnings. However, this revenue increase did not translate to a positive net income, as direct costs, including interconnect, settlement, and other charges, increased by 65.42%. Operating expenses decreased by 8.76% due to a significant drop in fee and subscription charges, offset by higher payroll expenses due to inflationary pressures.

Despite reducing the workforce from 317 employees in 2023 to 251 in 2024, payroll expenses remained high. Other expenses fell by 91.52% due to the absence of exchange losses. Provisions against ECL also decreased. Other income increased by 9.38% due to exchange gains and unclaimed liabilities written back. WTL recorded an EBITDA of Rs. 176.40 million, with an EBITDA margin of 3.5%. Depreciation & Amortization decreased by 15.93%. Finance costs increased by 10.78% due to higher discount rates. The company recorded a net loss of Rs. 1,358.61 million, a 32.36% decrease year-on-year, translating to a loss per share of Rs. 0.27.

Future Prospects

With several upcoming initiatives, including blockchain deployment, fiber to home implementation in urban centers, and a collaboration with World Mobile Group (WMG), WTL’s revenue is projected to improve considerably. The advancement of technologies such as 5G also provides significant opportunities for WTL and the broader telecommunications sector. WTL’s increased investment in R&D, infrastructure, and exploration of new business opportunities will drive both horizontal and vertical growth. The company intends to acquire 200,000 broadband subscribers in underserved areas. Additionally, a new service called “CADNZ” is being developed to serve the banking industry. Other projects include “billcare” to enhance billing processes and “million connect” to promote broadband growth. The parent company, GlobalTech Corporation (GTC), has announced the establishment of a center of excellence for artificial intelligence and big data services at WTL Pakistan. Furthermore, geographical expansion into the UK, Europe, and the Middle East is expected to yield favorable outcomes. However, continued increases in direct costs and finance costs present a challenging outlook for margins and net income.